MasterCard on My Radar

 | Aug 16, 2014 | 10:30 AM EDT
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I've calculated a trade setup in MasterCard (MA) -- and I'm not sure it will produce an entry trigger for you, but we can watch for a possible opportunity in the coming sessions. I'll start by explaining the play, and then we will look at the current pullback as our next zone to watch for a buy entry.

The setup is based on a Fibonacci price cluster, $73.44 to $79, as illustrated on the daily chart below. This zone encompasses a few symmetry projections from prior swings, at least one key retracement and at least one Fibonacci extension. So far, MasterCard has tested and held above this area -- and the low was made on Aug. 1.

MasterCard (MA) -- Daily
Source: Dynamic Trader

Now, besides the price-support cluster that was evident at the last low, we also saw some timing-based symmetry. In other words, the prior three swings lasted between 14 and 15 trading days -- very similar timing to the most recent healthy pullback, which has thus far lasted 13 days after an initial rally off the Aug 1 low.

Now, if the Aug. 1 low is proven to be an important one, it will be a good strategy to buy a pullback to that level. The pullback zone that I'm currently looking at comes in between $74.36 and $84.

If the price can hold above this general zone, I want to take a buy trigger from a 15- or 30-minute chart -- which would tell me it's worth placing a bet against that zone. The risk can be defined just a bit below the low end of the price-cluster zone. The upside potential on this setup, if it plays out fully, is to $80.74, the minimum target off the Aug. 1 low.

If that key support is violated, I will back off the buy side until further notice. Please remember to use stops, or to exit the trade, if MasterCard does not hold where we need it to hold!

Please refer here for more information on trade triggers.

See here for general guidance on Fibonacci trade setups.

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